This threat is able to bypass the “NOVATEK”, came to the us sanctions list in July 2014. The sanctions have not prevented the French Total, first, to implement joint commitments in the framework of the construction of an LNG plant on the Yamal Peninsula, and then to agree on joining to the project “Arctic LNG 2”, the purchase of 10% which was announced in may at the St. Petersburg international economic forum.
Raising equity capital
Another partner was supposed to be a Shell in August of 2015, chief Executive officer of the Anglo-Dutch company van beurden announced its intention to enter into the project “Sakhalin-3”, which operator is “Gazprom”. Soon, however, these plans fell through due to US sanctions against South-Kirinskoye field of the Okhotsk sea. With such problems faced by the American Exxon Mobil, which was forced to withdraw from the joint with Rosneft ventures (JVs), created for the exploration and oil production in the Kara and Black seas, information on the completion of transactions for the purchase of shares of Exxon Mobil in the Russian JV the company recently brought in the financial statements for the second quarter.
The presence of Total partly be explained by the nature of the sanctions against NOVATEK, which is not affected by raising equity capital. The status of exclusive Western co-owner of major Russian LNG projects makes Total to risk, which, however, are not yet ready other European companies: a buyer and 9.9% in “Yamal LNG”, which even before the sanctions worked “NOVATEK” has become the Chinese silk road Fund, the number of potential investors “Arctic LNG 2” featured Korean KOGAS, China’s CNPC and Saudi Saudi Aramco.
Loans guaranteed by export agencies
Some industry participants have also managed to break through the “loan embargo”, under which de facto includes all Russian banks and companies, regardless of whether they are under sanctions or not. Not accidentally, the Russian corporate external debt has declined over the past four years by a third to c $659,4 billion in July 2014 to $423,3 billion in July 2018, follows from the data of the Central Bank. One of the loopholes loans tied to contracts with European suppliers of process equipment, which provide guarantee of foreign export agencies.
In December 2014, SIBUR has agreed with a consortium of European banks on credit lines to €1,575 billion under contracts with the German Linde AG and ThyssenKrupp AG – design and procurement (EP) contractors of pyrolysis plants and polypropylene complex construction of Zapsibneftekhim, the agreement guaranteed the German Agency Euler Hermes. And in September 2015 for the realization of the same project, the company attracted loans by €412 million guarantees by the French Agency COFACE, which could be due to the contract with Technip (France) – EP-contractor for the installation of polypropylene, although reporting in 2015, “SIBUR” is not directly indicated.
In a similar way, and entered “Nizhnekamskneftehim” (NKNH), last may, the signatories to the loan agreement c Deutsche Bank AG for €807 million, the guarantor of which became Euler Hermes, the money will be directed to the project of ethylene complex with capacity of 600 000 tons per year, a technological partner in the construction of which will perform Linde AG. This tool uses and NOVATEK for its LNG project on the Yamal Peninsula: in December 2016, the company obtained a loan of €750 million from the Bank Intesa San Paolo under the cover of COFACE and Italian export Agency SACE, and in June of last year – a loan of €425 million from Raiffeisenbank, Intesa San Paolo and other European banks under the coverage of Euler Hermes and EKN (Sweden). These loans allowed the “NOVATEK” is not completely to choose the loans of Chinese banks, said the Chairman of the Board of the company Leonid Mikhelson, referring to financing from the China Development Bank and China Exim Bank, in 2016, have agreed to provide for “Yamal LNG” a little more than $12 billion.
The issue of Eurobonds
Another tool is Eurobonds, the sale of which in Europe in 2014 was banned for “Rosneft”, “Transneft” and “Gazprom oil”. Their release is still available for “SIBUR”, in September last year, posted a six-year Eurobonds for $500 million at a rate of 4.125%. By the time one of the shareholders of the company – Gennady Timchenko, for three years was under U.S. sanctions. Sanctions risks in varying degrees influenced the investment attractiveness of debt securities – in terms of placement and maturity they were for “SIBUR” less favorable than the NWF $1.75 shall be granted in 2015 as a bonded loan for a period of 15 years.
More important – but in comparison with European loans – the funds for NWF and NOVATEK, for which 150 billion rubles from the Fund was issued in the form of 15-year bonds tied to the LIBOR rate. Even more important were the loans of Chinese banks, which accounted for over 40% of the total cost of the Yamal LNG project ($12 billion from $26.9 billion), and without which the project would hardly have taken place. A secondary role of the European loans play in financing “Zapsibneftekhim”, especially since SIBUR” part they replaced a loan from Vnesheconombank for $400 million in December last year, approved by the government.
In this, perhaps, is the main effect of sanctions. Companies can find loopholes to attract funding in Europe, but for them it does not play a key role.